Buying property gives charities lucrative benefits

Charities should consider investment in property as an addition to their other income streams because planning legislation can bring lucrative partnerships with the commercial sector, a legal expert has said.

Under the terms of Section 106 of the Town and Country Planning Act 1990, a local planning authority can stipulate that a commercial development must include additional community benefits, such as providing a community centre or visitor attraction - known as 'planning gain'.

Faced with such a requirement, a commercial firm will often look for a voluntary sector partner to take on the facility and run it.

Charities can use this requirement to seek opportunities with local development agencies and planning authorities, according to Lynne Abbess, a partner with law firm Hempsons.

"Charities and social enterprises have even more to offer and can use it in their favour to get the best deals," she said. "If those opportunities are approached with recognition of the position of strength charities hold in the market and a firm adherence to their own commercial requirements, the gains can be substantial."

To benefit from such partnerships, charities should keep control over the planning process by working with their own advisers and design consultants, said Abbess. She also advised that funds be ringfenced in a specific trustee account with safeguards to protect overall funding, future income and expenditure on good causes.

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